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Vestas CFO Quits as Loss Is Four Times Wider Than Expected

Parts of a Vestas Wind Systems A/S turbine wait to be assembled at the Sacramento Municipal Utility District Wind Power Plant in Rio Vista, California. Photographer: Ken James/Bloomberg
Parts of a Vestas Wind Systems A/S turbine wait to be assembled at the Sacramento Municipal Utility District Wind Power Plant in Rio Vista, California. Photographer: Ken James/Bloomberg

Feb. 8 (Bloomberg) -- Vestas Wind Systems A/S said Chief Financial Officer Henrik Norremark quit as the biggest wind-turbine maker reported a loss four times wider than analyst estimates. The shares fell the most in a month.

The loss for the 2011 financial year was 166 million euros ($220 million), compared with a 156 million-euro profit a year earlier, Vestas’s annual accounts show. Analysts expected a loss of 40.3 million euros, according to the average of 16 estimates compiled by Bloomberg.

Vestas’s profits have been squeezed by Chinese competition and may be hurt further by a demand slump in the U.S. if federal subsidies expire. The resignation of 45-year-old Norremark came after the company cut 2011 earnings forecasts twice. Chairman Bent Erik Carlsen, Deputy Chairman Torsten Erik Rasmussen and board member Freddy Frandsen also won’t stand for re-election.

“There’s a low level of confidence in this management team, especially the guidance,” Martin Prozesky, an analyst at Sanford C. Bernstein & Co. in London, said by telephone yesterday after Norremark’s departure was announced.

On Jan. 3, Chief Executive Officer Ditlev Engel reduced the company’s profit expectations for the second time since October. Nine days later, Vestas said it would halt factory production and cut jobs to save money.

Quarterly Sales Fall

Revenue was 5.8 billion euros in 2011, short of the company’s initial 7 billion-euro target and missing guidance a month ago of 6 billion euros. Fourth-quarter sales declined 35 percent to 2 billion euros.

Projects have been postponed, not canceled, and are expected to be built this year, Vestas said in a statement, adding that their profit margins will be lower after costs rose. Weather delays and difficulties connecting wind farms to the grid previously forced the company to defer 1 billion euros of revenue to 2012 from 2011.

Vestas fell as much as 14 percent in Copenhagen trading, the biggest decline since Jan. 4. The stock was down 13 percent at 58.10 kroner as of 10 a.m. local time.

The company expects 2012 revenue of 6.5 billion euros to 8 billion euros and an increase in shipments to about 7 gigawatts, it said, without providing a forecast for its order intake. Vestas shipped 5 gigawatts in 2011.

Norremark Exit

Norremark, who also served as deputy chief executive officer, left citing “the conditions which during the last months have led to profit warnings,” the Aarhus, Denmark-based company said yesterday in a separate statement.

Norremark was also named chief operating officer on Jan. 12, part of a restructuring plan that included cutting 2,335 employees, or 10 percent of the workforce, and halting factory production to save more than 150 million euros by year-end.

Chairman Carlsen didn’t respond to a phone message seeking comment. Aili Jokela, a spokeswoman for Vestas’s U.S. unit, didn’t respond to phone and e-mail requests for comment.

To contact the reporters on this story: Ehren Goossens in New York at egoossens1@bloomberg.net; Justin Doom in New York at jdoom1@bloomberg.net; Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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